U.S.-EU Trade Rapprochement – Anything There for Rice?

WASHINGTON, DC -- Increasingly tense trade talk from both sides of the Atlantic took a sharp turn last week following a meeting here between President Donald Trump and EU Commission President Jean-Claude Junker.  The two issued a joint statement following their July 25 meeting agreeing, among other things, “…to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”  The agreement put a halt for now to an escalation of retaliatory tariffs from both sides stemming from U.S. import duties on steel and aluminum, and threatened duties on car imports.

“Last week’s statement is good news for both parties as the focus shifts to the negotiating table,” said Bobby Hanks, chairman of the USA Rice International Trade Policy Committee and a Louisiana rice miller.  “What’s lacking is any mention of agriculture and the need to remove serious market access barriers for rice.  Europe was once a 300,000 metric ton market for the U.S., but that’s dropped to around 55,000 tons and the EU’s discriminatory import duties on rice keep us at this low level.  We were hit again on June 20 when the EU imposed an additional 25 percent duty on imports of U.S. milled and broken rice in response to U.S. actions on steel and aluminum.”

The bottom dropped out of the EU market for U.S. exporters following the Liberty Link contamination of 2006 and the resulting EU regulatory overreach that allowed competitors to displace U.S. rice.  By the time the dust settled and EU consumers were again ready to consider U.S. rice, U.S. exporters faced a market increasingly dominated by milled rice imports, rising competition from duty-free rice from least developed countries under the EU’s Everything But Arms trade concession, and prohibitively high duties on U.S. milled rice.

“The EU’s rice tariffs are a maze of concessions based on country of origin and different rice types and forms, and access ranges from zero-duty tariff rate quotas to duties as high as $206 per ton for milled rice,” said USA Rice COO Bob Cummings.  “Apart from a duty-free TRQ for about 38,000 tons for milled rice, any rice shipped to the EU pays either a $258 per-ton duty for milled rice that includes the extra 25 percent retaliation, or a smaller duty on brown rice.  Demand for brown rice is much reduced, so we are competing with a heavy handicap and it’s very hard to make any headway.”

“We appreciate President Trump’s commitment to better trade with the EU.  USA Rice has been working for years to improve our situation in Europe, but the EU has held fast against any accommodation,” said Hanks.  “We look to the Trump Administration to make progress, and to include a full discussion of the EU’s discriminatory and distorting import duties on rice in any trade negotiation.  The U.S. has one of the most open rice import markets of any major rice producer and exporter and we call for the same treatment in the EU.”